Facing drought, U.S. farmers return to crop rotation

Farmers in top U.S. grain states are planning to rotate to other crops after repeated plantings of corn on the same fields, combined with a devastating drought in 2012, badly hurt yields.

Farmers in Iowa and Illinois, which accounted for almost 30 percent of U.S. corn production in 2012, are expected to shift some acreage that was seeded exclusively with corn over the past several years to soybeans this spring. They want to avoid another year of potentially significant losses as dry conditions persist, said agricultural market analysts and economists.

A move away from corn in those states may further drive up world food prices, which are already historically high, because corn stockpiles in the United States, the world's top exporter, are forecast to hit a 17-year low by the end of the summer.

Soaring corn prices, due in part to surging demand for ethanol, in recent years have encouraged a greater amount of corn being planted on the same land year-after-year despite the fact the practice depletes soil of nutrients and reduces yields.

Although corn plantings are expected to be near record highs nationwide in 2013, the loss of some acres in the most productive states could crimp U.S. yields.

Corn acres will shift from Iowa and Illinois to less-productive fields in North and South Dakota and the Mississippi Delta, raising the potential for lower yields overall, said Sterling Liddell, vice president of food and agribusiness research for agribusiness lending giant Rabobank.

The shift "could potentially be very supportive for prices because we're in such tight stock conditions with such little room for error," he said.

Iowa and Illinois could each see up to one million acres that have been devoted to corn production for the past several years switched to other crops in 2013, according to Rabobank.

That could mean a loss of up to 320 million bushels of corn from the 2013 harvest, based on the states' five-year average yields.

Farmers planted 14.2 million acres of corn in Iowa last year and 12.8 million acres in Illinois.

MISSING MOISTURE

The United States harvested 10.8 billion bushels of corn in 2012, the smallest in six years. The U.S. government is expected to detail its forecast for the 2013 harvest and plantings in March.

Ongoing dryness and the need to reinvigorate soils will encourage farmers to retreat, at least temporarily, from corn-on-corn production, according to agronomists. Soybeans naturally add nitrogen, a key fertilizer, to the land.

More so than soybeans, corn has a greater need for moisture during a critical summertime stage of development, raising the risk for yield losses if moisture is absent during that time.

Rains in August boosted the size of last year's soybean crop but arrived too late in the summer to benefit the already-ravaged corn crop.

Forecasters have warned the drought will not abate in the coming months.

"Farmers are going to do their best to not do corn-on-corn any more than they have to," said Rich Guebert, vice president of the Illinois Farm Bureau, who said he had heard many farmers complain about dramatic yield losses from corn planted after corn.

Rodney Weinzierl, the executive director of the Illinois Corn Growers Association and a farmer in the state's No. 1 corn-producing county, plans to plant soybeans on land on which he has grown corn for the past three years.

The decision to reduce corn plantings "has a lot to do with moisture," said Weinzierl, adding that he was "trying to better understand" a 40 percent decline in yields last year for corn plantings in fields that also had corn in the previous year.

DROUGHT BURNS FARMERS

There has been a movement toward repeated plantings of corn in recent years. Acres planted with corn last year and the year before in Iowa and Illinois rose 6 percent to 9.8 million acres, according to agricultural data company Lanworth, a unit of Thomson Reuters.

Total corn plantings in the two states jumped 1 percent to 27 million acres.

"What people were banking on was that corn prices had gotten up there high enough that it was going to offset that yield reduction, but in fact it didn't," said Mike Duffy, agricultural economist at Iowa State University.

It can all make a big difference to farmers' incomes.

Duffy estimated an average yield of 165 bushels per acre for corn grown after corn in 2012 and 180 bushels for corn grown after soybeans.

In 2012, it cost $4.94 a bushel to produce corn grown after corn in Iowa, 70 cents more than it cost to grow corn grown after soybeans. The higher cost was due to reduced yields for repeated plantings and to the additional fertilizer needed to compensate for lost nutrients, Duffy said.

Yields for corn grown after corn take a particularly hard hit compared to corn grown after soybeans when weather conditions are poor, Duffy noted, adding that farmers who planted corn repeatedly on the same land said: "Well we got burned here. We don't want to do it again."

RECORD PLANTINGS NATIONWIDE?

Still, all signs point to U.S. farmers planting a historically large number of acres to corn in 2013 due to high corn prices.

Monsanto, the world's largest seed company, last week projected 96 million acres of corn will be planted, down 1 percent from a record high in 2012.

Rabobank predicted total plantings will rise 0.5 percent to 97.6 million acres - which would be the most since 101.95 million acres were planted in 1936 before the advent of soybeans.